Correlation Between BIONTECH and Barclays PLC

Can any of the company-specific risk be diversified away by investing in both BIONTECH and Barclays PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BIONTECH and Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BIONTECH SE DRN and Barclays PLC, you can compare the effects of market volatilities on BIONTECH and Barclays PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BIONTECH with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIONTECH and Barclays PLC.

Diversification Opportunities for BIONTECH and Barclays PLC

0.6

Correlation Coefficient

BIONTECH  Barclays PLC

Poor diversification

The 3 months correlation between BIONTECH and Barclays is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BIONTECH SE DRN and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC and BIONTECH is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BIONTECH SE DRN are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of BIONTECH i.e., BIONTECH and Barclays PLC go up and down completely randomly.

Pair Corralation between BIONTECH and Barclays PLC

Assuming the 90 days trading horizon BIONTECH is expected to generate 2.54 times less return on investment than Barclays PLC. In addition to that, BIONTECH is 1.27 times more volatile than Barclays PLC. It trades about 0.05 of its total potential returns per unit of risk. Barclays PLC is currently generating about 0.16 per unit of volatility. If you would invest  7,656  in Barclays PLC on September 27, 2024 and sell it today you would earn a total of  504.00  from holding Barclays PLC or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BIONTECH SE DRN  vs.  Barclays PLC

BIONTECH SE DRN

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Barclays PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Barclays PLC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIONTECH and Barclays PLC

The main advantage of trading using opposite BIONTECH and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIONTECH position performs unexpectedly, Barclays PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barclays PLC will offset losses from the drop in Barclays PLC's long position.

The idea behind BIONTECH SE DRN and Barclays PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.